In a cramped flat in Karachi’s Lyari district, Fatima Siddiqui runs the calculations she hoped she would never have to make again. The LPG cylinder that kept her family’s stove burning through winter now costs 40 percent more than it did a fortnight ago. Across the border in Mumbai, autorickshaw driver Rajan Patil stares at a fuel pump showing prices he last saw in 2022. Neither of them has ever heard of Operation Epic Fury. Both of them are paying for it.

Oil prices surged past $100 a barrel on Sunday, March 9 — the first time crude has traded in triple digits since Russia’s invasion of Ukraine — after Brent jumped more than 30 percent, at one point topping $119, as the US and Israeli war on Iran entered its second week. Al Jazeera International benchmark Brent crude futures traded 11.6 percent higher at $103.47 per barrel on Monday morning, while US West Texas Intermediate futures were last seen 12.2 percent higher at $101.97, putting oil on track for one of its biggest single-day jumps on record. CNBC

The trigger is as structural as it is sudden. On February 28, 2026, the United States and Israel initiated coordinated airstrikes on Iran under Operation Epic Fury, targeting military facilities, nuclear sites, and leadership, resulting in the death of Supreme Leader Ali Khamenei. Wikipedia Iran’s retaliation was immediate and surgical: tanker traffic through the Strait of Hormuz dropped to four vessels on Sunday, March 1, compared with an average of 24 per day since January. Euronews For the world’s most critical energy chokepoint — the narrow passage connecting the Persian Gulf to the Arabian Sea — that is the equivalent of cardiac arrest.

For Pakistan and India, it is something closer to a pre-existing condition suddenly, violently exposed.

Why the Strait of Hormuz Is the Aorta of South Asian Energy

The geography of South Asia’s energy dependency is stark. Almost half of India’s crude oil imports and about 60 percent of its natural gas supplies move through the Strait of Hormuz. Seatrade Maritime Qatar and the United Arab Emirates account for 99 percent of Pakistan’s LNG imports and 53 percent of India’s, according to Kpler data. CNBC No other major economy outside the Gulf itself carries that kind of concentrated exposure to a single 21-mile-wide chokepoint.

The majority of the crude oil shipped through the Strait of Hormuz goes to Asia, with China, India, Japan, and South Korea accounting for nearly 70 percent of shipments, according to the US Energy Information Administration. NPR But the strategic buffer that separates China — with its substantial onshore storage — from India and Pakistan is decisive. India’s limited crude oil reserves of about 100 million barrels are sufficient for only 40 to 45 days of consumption, leaving the country particularly vulnerable to supply disruptions through the Strait of Hormuz, the Asian Development Bank warned on Friday. Business Standard Pakistan has no meaningful strategic petroleum reserve at all.

The prognosis from analysts is blunt. BMI (Fitch Solutions) identifies Pakistan and India as the most vulnerable among emerging markets, as energy importers with relatively high exposure to the Strait of Hormuz, while Egypt and Turkey are singled out for secondary exposure due to high energy import bills, fragile external positions, large energy subsidies, and unanchored inflation. Business Recorder

The Supply Shock: Unprecedented, and Worsening

Energy market veterans are reaching for superlatives they rarely deploy. Claudio Galimberti, chief economist at Rystad Energy, compares the effective halt of oil flows through the Strait of Hormuz to blocking the aorta in a circulatory system, adding that “we have not seen anything like this in pretty much the history of the Strait of Hormuz.” NPR

The anatomy of the disruption has several compounding layers. QatarEnergy halted activity at the world’s largest liquefied natural gas export facility after it was targeted in an Iranian drone attack, while tanker traffic through the Strait of Hormuz — which handles around a quarter of global seaborne oil trade and a fifth of LNG supply — has come to a near standstill. Bloomberg Iraq and Kuwait have already begun to shut in production, with analysts warning that the UAE and Saudi Arabia may also be vulnerable if the Strait of Hormuz remains closed for a sustained period. CNBC

Goldman Sachs, which had forecast a second-quarter Brent average of $76 per barrel as recently as Wednesday, now warns of a far darker scenario. The bank estimates that traders demand about $14 more per barrel than before the conflict to compensate for increased risks, roughly corresponding to the effect of a full four-week halt in flows through the Strait of Hormuz with spare pipeline capacity used as a partial offset. If flows are halted for five weeks, prices could reach $100 per barrel — a threshold already breached. Goldman Sachs

Saul Kavonic, a senior energy analyst, captures the systemic danger with particular clarity: cutting off 15 to 20 percent of the world’s oil supply not only slows down every economy globally but also introduces an inflation impulse — and inflation plus slowing growth is stagflation, which constitutes an economic disaster. Business Recorder

Pakistan: Structurally Fragile, Acutely Exposed

Pakistan enters this crisis with no margin. An IMF bailout program, a current account that was only just stabilizing, and energy subsidies already consuming a destabilizing share of the federal budget — the Hormuz shock arrives at the worst possible moment.

Petrol prices in Pakistan rose by Rs55 per litre in March 2026, triggering long queues at filling stations, increased transport costs, and widespread public frustration. Modern Diplomacy The government’s official line — that the increase is an inevitable consequence of global oil volatility — is accurate as far as it goes. What it understates is the structural dimension: Pakistan’s near-total LNG dependence on Qatar and the UAE, combined with the absence of meaningful storage infrastructure, leaves the country exposed not just to price spikes but to physical shortfalls.

Pakistan has limited storage and procurement flexibility, meaning disruption would likely trigger fast power-sector demand destruction rather than aggressive spot bidding, according to Go Katayama, principal insight analyst at Kpler. CNBC In practical terms, that means rolling blackouts in a country where electricity shortfalls are already politically explosive.

On March 4, Pakistan officially requested that Saudi Arabia reroute oil supplies through Yanbu’s Red Sea port, with Riyadh providing assurances and arranging at least one crude shipment to bypass the closed strait. Wikipedia The arrangement provides temporary relief. It cannot substitute for the volume, reliability, or price levels to which Pakistan’s energy system is calibrated.

The Pakistani rupee, already among the most depreciated major currencies of the past three years, faces renewed downward pressure. Every $10 increase in oil prices widens Pakistan’s current account deficit by an estimated 0.4 to 0.6 percent of GDP — an economy that cannot absorb that hit without either rationing foreign exchange or accelerating monetary loosening that further stokes inflation already running above 20 percent in food categories.

India: Scale Amplifies Vulnerability

India’s exposure is structural rather than acute — but at Indian scale, structural vulnerability produces acute consequences.

With nearly 90 percent of India’s crude oil requirement met through imports, any disruption in global energy supply — particularly through the Strait of Hormuz — poses a direct risk to macroeconomic stability, according to SBI Research. Business Today Moody’s warned that costly energy imports would weaken the rupee, raise inflation, worsen the current account balance, and complicate monetary policy as well as fiscal management if they lead to expanded subsidies to offset the economic shock. Business Standard

The fiscal arithmetic is unforgiving. India’s Union Budget for 2026–27 was constructed on oil averaging $68 to $70 per barrel. At $103, every rupee of subsidy relief the government extends to consumers — and political pressure to do so is intense, with state elections pending — translates directly into fiscal slippage. Every rupee of subsidy withheld translates into retail fuel price increases of ₹5 to ₹15 per litre on current trajectory estimates.

India has already ordered refiners to maximise production of cooking fuel as imports from the Middle East decline, while gas-intensive industries, particularly fertiliser manufacturers, may face pressure if LNG supplies remain tight. Business Standard The fertiliser link is particularly consequential: disrupted LNG supply constrains domestic fertiliser production just as Rabi crop planting cycles approach, threatening both agricultural output and rural inflation.

The Indian rupee’s recent relative stability — it had appreciated marginally against the dollar in early 2026 — faces a sharp test. India’s oil imports are priced in dollars, so a weaker rupee means the same barrel of oil costs more in local currency, driving inflation through the transport, manufacturing, and agriculture chains simultaneously. Wordzz

The Comparison Table: Pakistan vs India vs GCC

Tourism, Logistics, and the Invisible Multiplier

The economic damage radiating from the Strait of Hormuz crisis extends well beyond oil prices. The waterway is not merely an energy corridor — it is a central artery of the global logistics system, and its disruption is reshaping aviation, hospitality, and freight networks with consequences that will outlast any ceasefire.

Cruise ships reduced activity in the Persian Gulf and stopped using the strait, stranding 15,000 passengers on six major cruise ships. Wikipedia The Gulf aviation hub model — built on Dubai and Abu Dhabi serving as transfer points between Asia and Europe — is under immediate pressure as war-risk insurance surcharges inflate operating costs and itinerary rerouting adds hours and fuel burns to long-haul routes.

For Pakistan and India, the tourism dimension cuts both ways. The Gulf diaspora — some 7 million Pakistanis and 8 million Indians working in the Gulf Cooperation Council states — represents a critical source of remittances. Any sustained economic disruption to Gulf economies, whether through reduced oil revenues or conflict-related instability, threatens remittance flows that collectively account for 7 to 8 percent of Pakistan’s GDP and a meaningful share of India’s foreign exchange receipts. BMI’s baseline scenario is that the conflict in Iran will be large but short-lived, though there is a clear risk of a prolonged war. Among emerging markets, the economic impact will be most pronounced in the GCC, reflecting the shock’s adverse effects on trade, logistics, tourism, and investment. Business Recorder The knock-on to South Asian remittance economies would be severe.

The Forward Scenarios: Baseline and Downside

Baseline (BMI/Goldman Sachs): The conflict remains intense but contained, with the Strait of Hormuz beginning to partially reopen within three to four weeks as US naval escorts provide a corridor. Goldman Sachs estimates that a four-week full halt in Hormuz flows would push Brent to around $85 to $90 per barrel, with prices moderating as Strategic Petroleum Reserve releases from the G7 — which finance ministers discussed on Monday — provide partial offset. Goldman Sachs Under this scenario, Pakistan faces six to eight months of elevated inflation and currency pressure but avoids balance-of-payments crisis. India absorbs a current account widening of approximately 0.8 to 1.2 percent of GDP.

Downside (Prolonged Disruption): If the disruption in the Strait of Hormuz persists for another one to two weeks beyond current levels, prices could move toward $130 to $150 per barrel, according to senior market analysts. Business Recorder Under this scenario, Pakistan would almost certainly require an emergency IMF facility enhancement; India would face stagflationary pressure combining slowing growth with food and fuel inflation above 8 percent. The rupee and Pakistani rupee would both face disorderly adjustment risk.

The tail risk is darker still. If infrastructure is seriously damaged in oil-rich countries along the Gulf, it could take much longer for production to normalize even after missile strikes stop, and a full closure of the Strait of Hormuz would leave OPEC barrels in the region as effectively stranded assets in an extended war scenario. NPR

Policy Responses: What Islamabad and New Delhi Are Doing

Pakistan’s immediate moves:

• Emergency request to Saudi Arabia to reroute crude shipments via the Red Sea corridor through Yanbu port
• Engagement with the State Bank of Pakistan to manage rupee liquidity and cap speculative dollar demand
• Preliminary discussions with the IMF on contingency facility options if the crisis extends beyond six weeks

India’s immediate moves:

• Directive to state refiners to maximize domestic fuel production capacity
• Reopening of discussions on Russian crude procurement from floating storage in Asian waters
• Review of strategic petroleum reserve release protocols in coordination with the IEA

Both governments face the same fundamental dilemma: subsidise to protect consumers and blow up fiscal balances, or pass through prices and risk political instability. There is no clean answer when the originating shock is geopolitical and beyond domestic control.

Investor and Traveller Takeaways

For investors with exposure to South Asian equities and credit: the Pakistani rupee and Indian rupee face asymmetric downside risk in a prolonged disruption scenario. Pakistani sovereign spreads, already elevated, will widen further on any indication of IMF program slippage. Indian equities’ energy-sector composition and the fiscal arithmetic of subsidy policy make consumer staples and financial sector names most vulnerable to earnings revisions.

For travellers and the travel industry: Gulf aviation hubs face operational disruption and insurance cost inflation that will flow through to ticket prices across Asia-Europe routes within days. Bangladesh is experiencing severe strain, with the government bringing forward Eid holidays, ordering universities to close temporarily to reduce electricity demand, and imposing limits on fuel sales amid panic buying. Business Standard Regional tourism recovery, which had only just returned to pre-pandemic levels across South and Southeast Asia, faces a significant setback.

The Strait of Hormuz has been threatened before. It has never actually closed — until now. What the markets are pricing, and what Fatima Siddiqui and Rajan Patil are already living, is the realisation that 50 years of energy-security wargaming has finally become a news headline. The models suggested Pakistan and India would be most vulnerable. The models were right.